Government refuses to consider OECD's recommendation to include agriculture in the Emissions Trading Scheme despite agriculture making up half of NZ's emissions; OECD suggests Government eases back funding for irrigation

The OECD is calling for the Government to include agricultural emissions in the Emissions Trading Scheme.

In its third Environmental Performance Review of New Zealand, it says agricultural emissions make up 49% of all New Zealand’s emissions - the highest portion in the OECD.

Yet the Government is refusing to budge on the issue, saying making farmers pay more would send them “only one signal… reduce stock numbers”.

Referencing the contribution agriculture makes to the New Zealand economy, Environment Minister Nick Smith says the Government has a “duel objective” and needs to “look further than just environmental issues”.

Nitrogen balance increasing more than other OECD countries

In its report, the OECD warns New Zealand's growth model is starting to "show its environmental limits, with increasing greenhouse gas emissions and water pollution".

Despite the country only accounting for a tiny share of global emissions, the OECD warns intensive dairy farming, road transport and industry have pushed up gross greenhouse gas (GHG) emissions by 23% since 1990.

It says growth in intensive dairy production has increased the level of nitrogen in soil, surface water and groundwater. The nitrogen balance (the difference between nutrients entering and leaving the system) increased more than in any other OECD country from 2000 to 2010.

Overall, the OECD notes New Zealand has the second-highest level of emissions per GDP unit in the OECD and the fifth-highest emissions per capita, even though it generates 80% of its electricity from renewable sources - among the highest in the OECD.

“Having largely decarbonised its power generation, New Zealand needs to ensure its climate policies are effective in curbing emissions in all sectors, notably transport and agriculture,” says OECD Environment Director, who's also a former National Party Environment Minister, Simon Upton.

Yet Smith says it would be “unwise” for dairy, beef and lamb farmers to be incentivised to reduce their stock numbers, as they have a smaller carbon footprint than their counterparts around the world that would replace any shortfalls in their production.  

Furthermore, he doesn’t believe the ETS “could cope with the uncertainties that are associated for instance with the measurement of agricultural emissions at this point”.

“So no, the Government is not giving consideration to adding those agricultural emissions into the Emissions Trading Scheme,” Smith says.

“We’re putting our energy and our focus into a very ambitious global research programme so that we can find the technologies for which we can grow our agricultural industries, but reduce those greenhouse gas emissions.”

Government open-minded to envrionment-related pricing tools

The OECD suggests that if agriculture isn’t included in the ETS, the Government needs to develop alternative measures to counter the pressures of farming.

Smith says the National Government has enabled regional councils to put caps on nitrate levels in waterways.

“We accept the OECD’s message that there is limits, but we want to implement those in a sophisticated way that recognises that not all regions and waterways in New Zealand are the same,” he says.

The OECD also suggests the use of environment-related taxes, charges and prices should also be expanded.

Asked whether he sees room to up taxes, Smith says: “We’re open-minded about where you might sensibly extend pricing tools.”

OECD: Government needs to review funding for irrigation

The OECD recommends the Government review its financial support for irrigation in such a way that funding is only provided for projects that would not proceed otherwise, and that have “net community-wide benefits”.

Currently, 75% of water in New Zealand is used for irrigation and some regions are approaching water allocation limits, while others have already surpassed them.

The OECD says the grants and concessionary financing for irrigation projects lack “systematic consideration of environmental and community costs” and are in potential conflict to the Government’s freshwater management policy.

It notes the fact that on the one hand the government wants one million hectares of land under irrigation by 2025. It also seeks to double primary industry exports in real terms between 2012 and 2025.

Yet on the other hand, the 2014 amendment to its 2011 National Policy Statement for Freshwater Management was an “important milestone” that has filled a long-standing gap in national policy guidance under the Resource Management Act.

It also says the Government is underusing economic tools to address water allocation and pollution.

“This is partly because the government declared that ‘no one owns water’. Charges for water abstraction and pollution discharges are minimal, covering only the administrative costs of resource consents.”

Overall, the OECD says: “Water quality continues to deteriorate in some regions due to diffuse pollution from agricultural and urban run-off.

“Half of monitored river sites have enough nitrogen to trigger algal blooms. New Zealand has some of the highest levels of threatened native freshwater species in the world.”

Despite the Government’s efforts, the OECD says it could do more to assist local authorities in setting rigorous freshwater policy goals and speed up implementation.

“Regional councils have been slow to put the freshwater management policy into action. This has created uncertainty for water users and investors, and it reduces opportunities to bring environmental impacts to acceptable levels,” it says.

Urban development concerns

The OECD’s review also looks at New Zealand’s fast-growing cities and suggests that a simpler urban planning system, less restrictive land-use regulations and better co-ordination between land, transport and infrastructure planning, could help ease the pressure.

It notes car ownership in cities is also high, and current vehicle standards and taxes do not sufficiently encourage a shift towards cleaner, more efficient technologies.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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37 Comments

I question the integrity of the statistics they are using or at least the unit of measurement , this seems wrong.

The measure of 'emissions per unit of GDP " is not a sound measure to compare us with say France which is a huge economy with a massive GDP , so naturally it will be proportionately less on the scale used in this report

Firstly , our GDP is not that high , we are not industrialized , and we are largely an agrarian country

How can we be so much worse than Ireland , a tiny place with the same population size and very intensive agriculture and which uses some gas to generate electricity

Also where does the UK , Germany , Belguim , Japan , South Korea and Singapore sit in all this , these are highly developed industrialised economies .

It will be worthwhile spending some time reviewing this. We may be up Nick Smith creek without a paddle.

A largely agrarian economy has high agrarian emissions??

I wonder how much money was paid for that valuable piece of sage advice (rolls eyes).

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I wonder, is it such an insane idea is forgo some financial expansion to protect our beautiful country. I feel we have let ourselves by lead too much by measurable statistics such as GDP because many of the more important things are not as easily measurable. Please use your vote thoughtfully NZ public :)

trouble is globally we are way past this point - you not only have to forgo ALL financial expansion to protect the environment now - it has to decrease significantly. We are already way in overshoot.
Less consumption = financial chaos. Pick your poison.

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"our govt has no plans...." (the video)
Ah Smithy, you are totally predictable, delay, procrastinate, create study groups and in the end, do nothing.

ps - by the way -where are all the houses you promised as you wandered around the back blocks of Akl in your gummies clutching a precious clip board?

If you recall the land he was claiming was going to be constructed on wasn't owned by local or central Government. It was privately owned land which means it was just a piece of comical National Party propaganda.

Actually he wants to build on public reserves. he wants to sell them off to some developer. And how convenient it is an iwi developer too, so it is treaty settlement in there as well. So that makes it more okay to sell the public reserve because lets face it we need more houses and we all want treaty settlement even if it is to the detriment on NZ.

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While we keep our foot hard down on the GDP accelerator and eyes fixed on the property prices dial, every other indicator on the dashboard is flashing red. It's high time for a radical review of the purposes, costs and benefits of our single-minded pursuit of GDP.

New Zealand's previous generations had a reputation as pioneers in social and economic thinking - the kind of leadership we now look to the Scandanavians for. Perhaps our nation could once again move deservedly among the leaders in global thinking? One place to start might be substitution of the Genuine Progress Indicator (GPI) metric for GDP.

The fact is, the status quo as it's pursued politically and economically here has no future. Either we accept the need for radical change and rise to the challenge, or we risk collapsing our environment, society and economy.

Agree. Needs long term focus and reorientation of policies to things that matter - clean water, good food, happy safe kids, good jobs.
Current politicians wont see collapse - they will all be dead and buried (as will I)

Yes Mr Bond.
Thats the thing with models!
You'd best pick one up first and see how it works.
How do we know the OECD model is comfortable performing effectively upside-down.
Anyway, who ever heard of a model working out happily in the end whatever way - not even close!

many models work fine, I use them all the time, works for me, no issues. If of course you wish to blindly guess, be my guest.

Many Models work fine... Corgi or Matchbox, that the collection you refer?

In the finance real world too often folk are left with the ... "never saw it coming".... routine

Fletcher Buildings expects earnings could be up to $150m less than forecast

http://www.stuff.co.nz/business/90611189/fletcher-buildings-expects-earn...

and/or
Shares in the Australian-based homewares and electronics retailer, which operates 39 stores in New Zealand, fell 8.2 per cent - it's biggest decline in five years with the company offering no explanation to the market for the drop.
In response to the Australian stock exchange notice issued yesterday, Harvey Norman said it was "not aware of any information concerning it that has not been announced to the market which, if known by some in the market, could explain recent trading in its securities".

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1182...

Here's another brilliant model at work:

http://www.stuff.co.nz/environment/climate-news/90657833/sea-level-rise-...

Good reasons to panic include:

* It is based on a model
* Models are used by scientists so they must be true
* No model has ever been wrong (not even the ones that were)
* Leonardo DiCaprio produced it

Ignore the claims of Tim Naish, climate professor at Victoria University claiming there is "uncertainty". He is clearly under the misapprehension that models are simply tools that extrapolate assumptions over time and not the font of all truth.

Sea levels are rising as they have done since records began but the rate of increase is statistically unchanged over any period which would lead one to assume the ongoing rise is due to natural causes.

Mainly the simple fact we are leaving an ice age !

Sorry - duplicated

"New Zealand's previous generations had a reputation as pioneers in social and economic thinking .."

Those might be very rose coloured glasses there workingman.

They also had the advantage of selling everything we could make to the Poms who would pay good money for it but didn't save any of that for future generations like is done now with sovereign funds.

They also saddled us with a pension scheme they didn't properly budget for so it can't be sustained in its current form for future generations.

They also kicked the treaty settlement issues down the road for future generations to deal with.

exactly - And world population has doubled if not tripled since the the good old days ...thats where the unsustainable growth problem kicks in

True, Ralph, the past too easily takes a rosy tinge. And it's not what others have done that counts. It's what we choose to do.

I think we should move al MPs to Kaiapoi....see how the other half lives.

K-town rules!

It appears that this government's agenda has been economic growth at all costs. Our rivers and waterways are being polluted with nitrogen from high volumes of cow urine. Clean air and clean water are far more important than having a flash car and a bigger TV screen. Just saying!

Agree with most comments here, but it is clear from Nick Smith's comments that the Government is prepared to sacrifice everything at the altar to the almighty Dollar. This mess will be hard to clean up if we don't start getting real about it yesterday!

All National sees is a budget surplus to offer swing voters a tax cut to win the election. Not sure if it will work, pre-BE I would have said yes JK would have won another term easily but now looking at BE stumble....I have some hope we get a new Govn. At least I hope I hope I am right to wish for it, Labour and Little look equally awful, sad really.

Sacrifice Kiwis' home ownership. Sacrifice water quality. Sacrifice the next generations so their core voter bloc can enjoy short-term gains.

And to boot, by making the taxpayer pay for irrigation schemes...where's the capitalism gone when you need it?

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Nick Smith's arrogance knows no bounds - as the National Government pushes through RMA amendments this week that allow for HIM to over-ride local government plans;

https://organicnz.org.nz/media-releases/ge/ge-free-zones-threat-rma-amen...

TVNZ's Sunday did a good piece on it;

http://tvnz.co.nz/sunday-news/billion-dollar-battle-video-6518656

Well worth a watch - perfect proof that Nick Smith's arrogance knows no bounds.

He needs to go along with his "race to the bottom" government.

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Watching Nick Smith comment on water a few days I seriously wondered if the National Govt has a death wish, don't want re-election as they know they have created a mess (immigration, housing, water, traffic chaos, infrastructure, the whole shooting box) and don't want to carry the can for the next phase. Thats ok guys I havegot the message - I'm a vote looking for a home.

This irrigation story by The Nation reporter, Caitlin McGee, is also well worth a watch. 

Thanks

"Big Dairy is NZ's NRA" - enough said.

Excellent analogy.

Thanks for the link Jenee...

That Takaka location needs to be preserved, then get started on all the others, well before 2040...it will be too late by then, as it is too late Now!....

Reversing stupidity is almost impossible.

Ruining our essential clean water and environment for "Vested Interests' sake is little short of madness. ..

That stupidity by Government and Councils is allowed to collude and take part, is tantamount to treason.

The people shown need our collective assistance.

We need to vote out the people problem, that we as tax payers actually pay for ...I might add..... and replace them with fresh minded people with fresh ideas and who care that things are done right...not wrong.

This is relatively a New Country, following Old World Problems and trends.

If that means a cut in pay for a 'Water Sample Test...weekly, daily"...in the short term, ...then I know which idiots, I would take it off.

Start at the Top....work your way down. ...The only way to solve all....Problems.

Kate you have nailed it -with your description of this government -if I can paraphrase what you have been saying recently -with the following comment.

"In the past NZ was fed TINA -'there is no alternative' to justify every radical neoliberal policy that the public did not want, now we are fed TINS -'there is no solution' to justify why the government can't change any policy that the public do want changed" ........this applies to housing, foreign investment, immigration, water......

Yes, glad you can see it too.

I mainly blame the stagnation on Bill English - and then the rest of the mob in behind him being too gutless to undertake a leadership challenge. I mean the other day on the Nation he said there is no need to review abortion law - a decades and decades old law that deals with abortion under the Crimes Act, for goodness sake. And then the next day all his female caucus colleagues fell in behind and defended that view.

It's nuts! They're nuts! Bill English and Nick Smith are both yesterday's politicians. They should be retired!!!!! (Oh, by the way, I see dear Maurice - another old crony - got a diplomatic post in LA).

And the rest of the caucus is pure gutless (aside from Judith, that is - but she's keeping her head down as hubby's Oravida interests remain well served under the current regime);

http://www.newshub.co.nz/home/money/2016/04/oravida-jumps-in-to-export-k...

This is one time Smith has got it right having stuffed up previously big time. The emissions figures are a total nonsense.

BACKGROUND:

In 1991 a delegation from New Zealand was instrumental in ensuring the first IPPC Rio convention always referred to net rather than gross emissions.

The very significant CO2 take up of forestry, farm and crop land was a disproportionate share of New Zealand’s productive outputs vs industrialised countries. This would need to be recognised in any future emission calculations.

This was accepted and formed the basis of now universally recognised carbon credits – reinforced by recent statements from the COP-21 ex Paris.

Despite this earlier commitment - New Zealand subsequently and very unwisely chose gross agricultural emissions as the basis of emission measurement rather than the scientifically accurate net emissions.

This was agreed to by then Minister Nick Smith - not on any scientific basis but " by agreement between the parties ".

Calculating agriculture net emissions was seen as too difficult and of course formed a much smaller share of total emissions for virtually all other countries vs New Zealand.

On a net basis – as calculated internationally for biofuels – New Zealand’s agricultural emissions are roughly half the published figures.

BASIS OF MEASUREMENT:

New Zealand’s overall emission levels then show a very different scenario as agriculture is seen as contributing roughly half New Zealand’s total emissions.

While we are measuring increases from 1990 levels - New Zealand's massive dairy expansion has taken place over the last 25 years and it this we are recognising today.

As the increases from 1990 are measured on a gross basis – that will similarly overstate the increase by a factor of roughly two and our potential liability.

BIOFUELS – COMPARISIONS:

Biofuel emissions, generally from maize crops, are calculated on a net basis as is forestry. If this was not the case, then biofuels could not be generating zero net emissions.

Biofuels are deemed to be zero net emitters world wide as evidenced by the extensive programs underway to use them as solutions via numerous new fuel program.

The simple and undisputed scientific fact is that the massive and certain absorption of atmospheric CO2 from New Zealand’s extensive grasslands and crops driven by the carbon cycle is currently not counted against our published gross agricultural emissions figures.

This leads one to believe we are a high emitter relative to others which is simply not the case.

Imagine a maize crop that is processed through a bio-digester to make alcohol that is burnt as a fuel leaving universally acknowledged near zero net emissions as Air New Zealand are planning.

Yet that exact same crop as grown on New Zealand dairy farms today is denied the CO2 absorption credit that is allowed in the biofuel case.

Z Energy have invested millions of dollars in a new plant to convert tallow - produced as a byproduct of our meat industry - to bio-diesel and are claiming zero net emissions for this product.

Yet under our current emissions reporting regime - agriculture is shown only on a gross basis with no absorptions allowed. Therefore as Z Energy are using a meat byproduct as feedstock they are not entitled to claim the credit for the CO2 absorbed to the pasture and then converted to meat, wool, crops and dairy outputs by our ruminants.

The emissions from a litre of biofuel are near identical to those from a litre of ordinary diesel. The only possible environmental benefit can come, quite correctly, from subtracting the CO2 absorbed in the pasture and crops used as feedstock to the ruminants that converted it to meat and tallow.

Any initiatives that are based on these scientifically incorrect assumptions will invariably deliver distorted outcomes – and that is exactly the situation we are now attempting to address.

New Zealand has already stated that with virtually zero potential for emission reductions in both our power generation – already at 80-90% renewables - and agricultural sectors, meeting our Paris submissions will involve the purchase of offshore carbon credits which we do not know the quantum or future price of.

We are in a strong macro growth environment with consequent growth in transport fuel use for which there is again no technology solution on the horizon for heavy and medium vehicles, marine or aircraft segments – the major hydrocarbon consumers and thus emitters.

It is totally illogical to recognise carbon credits when we need to purchase them – yet ignore the massive carbon sink generated by New Zealand farms simply as a component of the carbon cycle’s operation – the existence of which is not in dispute.

ECONOMICS:

Given the ongoing 45 consecutive years of current account deficits and consequent very high levels of foreign debt New Zealand has accumulated - any purchase of credits must involve more offshore borrowing or asset sales. No one is predicting any return to current account surpluses in the foreseeable future.

With no knowledge of future growth scenarios but all forecasts showing high growth scenarios and no knowledge of future carbon credit prices, or the level of the New Zealand dollar, committing to balancing our emissions with the purchase of offshore credits amounts to generating an uncapped liability of what could be billions of dollars.

This makes no sense for any organisation, and even less when the liability is calculated using faulty assumptions that are not science based.

GLOBAL EMMISSIONS:

As one of the worlds most efficient food producers - to lower global emissions for any given level of food production it would make sense to increase NZ's farmed outputs and consequent emissions at the expense off less efficient producers.

With ongoing population increases and increased food demands for wealthier consumers - agricultural emissions are going to increase.

Recent UN projections show world population exceeding 11 billion in 2100 – a 2 billion increase over previous projections due to very high population growth in Africa.

The objective should be to minimise these associated increases - and this will, and should involve higher - not lower emissions from NZ's agricultural sector.

The recent IPPC report to the Policy Advisers show the warming impact from agricultural emissions near equal to that from what is labeled carbon black - primarily particulates from coal fired heating, power, steel and cement production.

Thus on the scientifically correct net emissions basis – the IPPC is now in effect stating that carbon black has roughly twice the warming impact versus agricultural emissions.

Deaths from particulate pollution – primarily from coal - total some 1 – 1.5 million per annum in China, similar numbers in India, large numbers in Africa and over 50,000 pa each in the USA and in the EU.

It simply makes no sense to focus on agricultural emissions when any rational investment should target global particulate emissions given their roughly double the warming reduction benefits.

The only difference is that one is currently killing some 2-3 million people per annum – yet not a single individual has ever died from a ruminant emission.

Rather than commit investment to offsetting totally irrational agricultural emissions reductions - any investment should be focused on achieving similar cooling benefits but with substantial life saving benefits at the same time.

This is a global problem and can only be solved with global solutions.

A scientifically rigorous basis of measurement is a pre-requisite for any rational policy development on agricultural emissions.

Not a word on how NZ is a giant CO2 sink !!!

My cynical observation of the emission trading scheme is that it created an expensive bureaucracy of unproductive people. I don't think the scheme has saved an acre of rainforest. The Amazon is still being cleared, Indonesia is still evicting and genociding the native population that are in the way of the advancing palm oil industry and the NZ government still gives Indonesia $50 million a year aid package.
Balize put its hand up asking for money to justify protecting its rain forest and stop development but no money was forthcoming. The ETS is just an in house money collection scam that is just one more leach sucking off a nations productivity.